Crude Oil Holds Steady as US Supplies Surge by 14 Million Barrels

Free $100 Forex No-Deposit Bonus

Crude oil futures are holding relatively steady on Wednesday as the US government reported a bigger-than-expected increase in domestic inventories. After enduring its worst month on record, analysts are warning that more pain is to come due to Saudi Arabia flooding the market with cheap oil and global demand at tremendous lows. Could crude fall to the low teens?

May West Texas Intermediate (WTI) crude futures dipped $0.01, or 0.05%, to $20.47 per barrel at 18:05 GMT on Wednesday on the New York Mercantile Exchange. Crude prices cratered 56% in March and fell 67% in the first quarter of 2020.

Brent, the international benchmark for oil prices, is plummeting in the middle of the trading week. June Brent crude futures plunged $1.33, or 5.05%, to $25.02 a barrel on London’s ICE Futures exchange. Brent’s recent performance has been comparable to US crude, declining 51% last month and 62% in the January-to-March period.

According to the US Energy Information Administration (EIA), domestic crude inventories surged by 13.8 million barrels for the week ending March 27. This is the 10th consecutive weekly increase and is much higher than the median estimate of 4.6 million barrels. Gasoline supplies increased 7.5 million barrels, while distillate stockpiles dropped 2.2 million barrels.

Saudi Arabia is projected to produce more than 10 million barrels per day (bpd) this month, and potentially reaching maximum capacity of 12.5 million bpd. Unless a deal is negotiated, analysts are anticipating Riyadh to keep pumping the market with oil next month. This would create a global supply glut as demand is expected to remain at historic lows in the near-term due to the COVID-19 pandemic.

Other countries are beginning to adapt to the bearish conditions to support prices. A plethora of oil companies across North America and Europe are slashing budgets, reducing output and exploration, and curtailing operations. This might explain why oil companies have been performing well in recent sessions, despite the collapse in prices.

It is unclear how long these producers can sustain operations, however. Many energy firms need oil to range between $40 and $60 a barrel to remain profitable, and the forecast is that oil will plunge to as low as the low teens.

In other energy commodities, May natural gas futures declined $0.055, or 3.35%, to $1.585 per million British thermal units (btu). May gasoline futures decreased $0.04, or 6.61%, to $0.5535 a gallon. May heating oil futures shed $0.0636, or 6.35%, to $0.9379 per gallon.

Copyright © 2020. All Rights Reserved. FXDailyReport.Com
Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose. will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets.